Small Business Hiring in 2012

During the first two months of the New Year, the US economy showed significant job growth. This development was predicted by the Gazelle Index national survey of small, minority and women-owned businesses. The 2012 hiring prospect for small businesses is strong, based on the survey that was conducted at the end of 2011. The Gazelle Index results have been confirmed by recent national economic data. The Index is the first ever quarterly survey of small-business owners wherein results are broken down by women, Hispanics/Latinos, African American/blacks and non-minority/whites. The survey includes 631 responses from randomly selected CEOs, who operated businesses with 10 to 100 employees. The results have a margin of error of + or -5%.

Hiring Plans: The Department of Labor Jobs Report indicated that hiring increased during the first two months of 2012. This was consistent with the fact that 26.6% of small businesses in the survey indicated they would hire. Only 14.4% of small businesses indicated they would reduce hiring. Earlier, the Gazelle Index published articles about the outlook for businesses owned by African-Americans/blacks, Hispanic/Latino and women.


Regional Hiring: Regionally, 47.4% of small businesses in the Gazelle Index survey are located in the South; 22.5% are located in the West, 19.2% are located in the Midwest and 10.9% are located in the Northeast. Hiring by small businesses will be strong in the Northeast, Midwest and South as 27.5%, 29.2% and 29.3% of businesses in the different areas plan to increase hiring. In comparison only 13.0%, 13.3%, and 12.1% respectively plan to cut hiring.

In the West, a higher percentage of firms will reduce employment (20.6%) than the percentage that will increase employment (18.4%).

The Effect of the Recession on Employment: Small businesses located in the South were hardest hit by the recession as 53.5% of businesses in the region have decreased employment since the recession, while 20.7% have increased employment. In the South, 30.0% of firms that decreased their workforce did so by 50% or more.  Small businesses located in the Midwest were hurt the least by the recession; only 35.8% of businesses located in that region decreased employment while 30% increased employment.

Industry Distribution: The largest industries for small businesses included in the survey are as follows: construction, 17.9%; management and administrative services, 12.7%; retail trade, 12.7%; health care and education, 8.7%; manufacturing, 8.7%; professional and technical services, 8.1%.

Future Hiring by Industry:

During the first three months of the New Year, employment growth in small businesses will be strongest in the following industries:

  • information technology – 45.9% of businesses indicated they will increase hiring while only 2.7% will reduce their workforce
  • management and administrative services – 47.2% will add jobs while 15.0% will cut jobs
  • wholesale trades – 25.6% will add jobs while 9.3% will cut jobs

The industries that will face the weakest hiring are as follows:

  • retail trades – 16.2% will add workers while 15.0% will reduce employment
  • finance and real estate – 17.4% would hire while 13.0% will reduce employment
  • and accommodations and food services – 14.6% will add while 12.5% will reduce employment

2012 Gazelle Index Economic Forecast

  • Expect to see much more hiring and economic growth in 2012
  • Expect GDP to grow between 3% and 3.5% during the first half of the year
  • Expect the overall unemployment rate to decline to 7.5% by the third quarter of 2012